Discriminating against families: Italian family benefits before the ECJ

 

 

Virginia Passalacqua, post-doctoral researcher in EU law, Utrecht University

 

In Italy, if you are a multimillionaire and you just had a baby, the State gives you 960 euros. However, if you are, say, the non-EU domestic employee of such a millionaire and you also just had a baby, the State gives you zero.

How is this possible? Thanks to Italian legislation that for 20 years has discriminated systematically against foreign families. No wonder, these families are also poorer compared to Italian ones: 25% of them were in absolute poverty in 2020, against 6% of Italian ones.

In July 2020, the issue of discriminatory criteria for access to family benefits arrived before the ECJ, thanks to a reference by the Italian Constitutional Court (ICC), currently pending (O.D. and others, C-350/20).

This is the fourth time that the ECJ is asked to assess Italian discriminatory criteria to access family benefits (after Martinez Silva, VR, and WS). But this time, the ECJ is called to interpret a new legal parameter: Art. 34.2 of the Charter of Fundamental Rights of the EU (the Charter). Can this be a game-changer?

The relevance of Art. 34.2 of the Charter has been questioned by commentators: admittedly, secondary norms are sufficient to declare the Italian law incompatible with EU law. Yet, it is argued that the ECJ should not miss this opportunity to clarify that migrants’ equal access to benefits is a fundamental right in the EU, providing guidance both to the Italian top Court and to the lawmaker.

 

The dispute before the ICC and the preliminary question

 

The facts of the case are rather simple. O.D. and seven other TCNs applied for family benefits, either assegno di maternità or bonus bebè, alias maternity and childbirth allowance.

The maternity allowance exists since 2001 and is granted to low-income women that do not receive a job-related maternity allowance. Instead, the childbirth allowance was introduced in 2014 to support families with a newborn. This was originally granted only to low-income families, but a 2019 amendment made all families eligible; still, the amount of the allowance varies according to their income (from 960 to 1920 euros p/y).

The Italian National Institute for Social Security (INPS) refused to grant O.D. and others the maternity and childbirth allowances because only Italian nationals, EU citizens, and TCN long-term residents are eligible under Italian law. Instead, the applicants are single permit holders: legally residing TCN workers whose status is regulated by the Single Permit Directive 2011/98/EU.

O.D and others challenged such refusal on the grounds that it entailed discrimination and was contrary to EU law. Indeed, Art. 12 of the Single Permit Directive imposes to Member States to grant single-permit holders equal treatment with nationals in several areas, including “branches of social security, as defined in Regulation (EC) No 883/2004”. They argued that the two allowances must be considered as social security and that they are equally entitled to them.

The applicants, supported by ASGI - a pro-migrant association, won all the proceedings against INPS before first and second-instance courts, until they reached the Italian Supreme Court. This decided to refer their cases to the ICC for a constitutionality assessment, which, in turn, decided to make a preliminary reference to the ECJ, under the consideration that this is an area “marked by the growing influence of EU law”.

The preliminary reference asks whether the childbirth and maternity allowances can be considered as branches of social security under Regulation 883/2004 so that they would fall in the scope of application of Art.12 Directive 2011/98 and Art. 34.2 of the Charter, which grants equal treatment to any legally resident person in matters of social security and social advantage.

I will tackle these issues in order.

 

Are the maternity and childbirth allowances to be considered as social security under Regulation 883/2004?

 

Arguably, EU law and case law leave little space for interpretation on this question. The ECJ has consistently held that to understand whether a benefit falls within the scope of Regulation 883/2004 we need to look at its “constituent elements”, i.e. “its purpose and the conditions for its grant, and not on whether it is classified as a social security benefit by national legislation” (UB C-447/18, at 22).

First, the benefit’s purpose must be related to one of the risks listed in Art. 3 of Regulation 883/2004, among which appear “maternity and equivalent paternity benefits” and “family benefits”, defined as “all benefits in kind or in cash intended to meet family expenses” (Art. 1).

Second, the benefit must be granted automatically on the basis of objective criteria, without any individual or discretionary evaluation of personal needs (Martinez Silva, at 22).

Both maternity and childbirth allowances are granted on the basis of objective criteria (i.e. income and the birth of a new child) and give economic support to families. They perfectly match the ECJ definition of social security, and this is why all first and second-instance Italian courts upheld the applicants’ view and granted them equal access to the allowances as required by Art. 12 of the Single Permit Directive.

INPS and the Italian government, however, advanced an exception in respect to the childbirth allowance. They argued that its goal is to incentivizing birthrate, rather than meeting family expenses; this would be confirmed by the fact that (from 2019) the childbirth allowance is a universal benefit, granted to all families and not only to low-income ones.

But this point too had already been addressed by the ECJ, in the case law on free movement of workers. In Reina, the Court assessed whether a German measure (“childbirth loan”) could be legitimately reserved to German nationals on the grounds that it was aimed “to make up the relative deficit in births among the German population in relation to the foreign population”.

Unsurprisingly, this chauvinistic argument did not convince the ECJ. The Court stated that the sole fact that a social measure pursues a demographic aim is not enough to exclude it from the scope of application of EU law and that social security and advantages must be granted equally to EU migrants (Reina at par 15; Commission v. Greece, C-185/96, at 34). Ironically enough, in the case of Reina the discriminated family was of Italian nationality.

 

Art. 34.2 of the Charter: a hollow hope or an added value?

 

As mentioned, the Italian Constitutional Court’s decision to invoke Art. 34.2 of the Charter was met with skepticism by commentators, who deemed it superfluous and of questionable relevance (Giubboni, 2021). This is because, as previously shown, secondary law is sufficient to declare unlawful the exclusion of single permit holders from the beneficiaries of the two allowances. So, does the Charter lack any added value?

Upon a closer look, the answer is no. Art. 34.2 of the Charter states:

Everyone residing and moving legally within the European Union is entitled to social security benefits and social advantages in accordance with Union law and national laws and practices.

This provision does present at least three important advantages. First, it refers to both social security and social advantages, while Art. 12 of the Single Permit Directive refers only to social security. Second, it grants equal treatment to all migrants residing legally, without making distinctions based on status. Third, it confers to the migrants’ right to equality a fundamental status in the EU.

The concreteness of the first two advantages is tempered by their limited scope of application (the Charter applies to Member States only when they implement EU law) and by their being subject to limitations under EU and national law. Instead, the third advantage, abstract as it is, is more significant.

In a context where even the European Social Charter grants migrants only limited access to social benefits (see Art. 19), the broad scope of Art. 34.2 sounds revolutionary. This confirms that, despite the (often valid) criticisms against the restrictive EU migration policy, fighting discrimination against migrants is a hallmark of the EU.

Indeed, the ECJ has fought discrimination against (EU and TCN) migrants for decades, pioneering the idea that equality is a necessary precondition for inclusion and integration (Kamberaj, at 90).

The case of O.D. and Others offers the ECJ the opportunity to clarify the fundamental nature of the principle of equal access to benefits for TCN migrants, which so far has been relegated to an ‘ordinary legislative function’ (Muir, 2020, at 121). This would pursue not only a rhetorical function, but it would provide guidance amidst a very confusing “polycentric” adjudication practice (Kilpatrick, 2014).

Especially in Italy, national courts have suffered from a lack of uniform interpretation when adjudicating migrants’ equal treatment (also because of the ‘dual preliminarity’ controversy, Lazzerini 2020). And the ICC denounced this situation in its reference: “The sheer number of pending disputes is testament to the serious uncertainty concerning the meaning to be ascribed to EU law.”

Moreover, Italian norms in many parts contain discriminatory provisions against migrants, and a current proposal to reform family benefits features again discriminatory selection criteria, despite a pending Commission infringement on the matter.

The ECJ evaded its obligation to interpret Art. 34.2 once (in the case of UB, C-447/18). This time, it should state clearly that migrants’ equal access to benefits is a fundamental principle of the Union, sending a powerful message to the Italian Constitutional Court and the Italian lawmaker.

 

Conclusion

 

The preliminary reference in the case of O.D. and Others speaks of an alarming phenomenon. In Italy, TCN families in need have been denied equal access to social benefits for decades, and the childbirth allowance reached a low point in this respect: it is universally granted to all but to TCN migrants.

Against this background, the preliminary reference in the case of O.D. and Others offers an important opportunity. The ECJ has a long tradition of fighting discrimination and constitutionalizing equality. In the case of O.D. and Others, its ruling can acquire erga omnes effect thanks to the follow-up ICC judgment.

The EU Court should not miss this opportunity for stating out and loud that equality is a fundamental principle of the EU also when it comes to TCN migrants, which cannot be disposed of by the erratic will of the government of the day.

 

Barnard & Peers: chapter 26

JHA4: chapter I:6

Photo Credit: Guiseppe Milo, via Wikimedia Commons

Unemployment, residence rights, social benefits at three crossroads in the Tarola ruling

Francesca Strumia, Senior Lecturer, University of Sheffield School of Law*

*This post draws in part on research supported by a Research Fellowship at the Collegio Carlo Alberto in Torino

Overview

Last week’s CJEU ruling in Tarola, responding to a preliminary reference from the Irish Court of Appeal, interprets yet another cryptic provision of the Citizenship Directive, art. 7(3) on retention of worker status. The ruling sits at the intersection of EU law on free movement of workers, and on free movement of citizens. It is about rights descending from the status of worker. Yet it concerns the situation of unemployed persons at the periphery of workers’ status, whose condition stretches into citizenship territory. For these reasons, the case provided an opportunity for the Court to blend the assertive approach of its case law on workers with the cautious attitude it has adopted in its recent case law on non-economically active citizens. The resulting judgment adds yet another chapter to the tormented story of access to social benefits in the context of free movement.

Analysis

Mr. Tarola, a Romanian national, worked in Ireland in either an employed or self-employed capacity for several periods of a few weeks each in 2007, 2013 and 2014. In 2013 and 2014 he applied there for jobseeker’s and welfare allowances. His applications were refused on the ground that absent proof of ability for self-support and absent a sufficiently long employment record he had not demonstrated habitual residence in Ireland. In the resulting litigation, Mr. Tarola argued that he had the right to reside in Ireland for the six months following a two-week period of employment in July 2014 under art. 7(3)(c) of the Citizenship Directive. The argument did not convince the High Court, however it raised attention at the Court of Appeals that referred to the CJEU.

The referred question revolved around the interpretation of article 7(3)(c). More precisely, paraphrasing Advocate General Szpunar, the question was whether a Union citizen who works in another Member States for two weeks otherwise than on a fixed-term contract and then becomes involuntarily unemployed retains the status of worker and the right to residence that comes with that status.

Article 7(3)(c) of the Citizenship Directive is particularly convoluted. It provides for the retention of the status of worker for no less than six months in two hypotheses not clearly distinguished until yesterday’s ruling. The first situation is fairly straightforward: duly recorded unemployment following termination of a fixed-term contract of less than a year in duration. The second is more nebulous. The text refers in this respect to a person having ‘become involuntarily unemployed during the first twelve months’ and having registered as a job-seeker. The court found in particular that the text left two aspects undetermined: (i)  the type of activity or contract in whose context a person became involuntarily unemployed and 2) the context of the ‘first twelve months’ phrase, whether first twelve months of any employment contract, of a fixed-term contract, of residence in the host Member State, or else (par. 35). 

The court’s solution was that the provision allows retention of the status for workers “in all situations in which a worker has been obliged, for reasons beyond his control, to stop working in the host Member State before one year has elapsed, regardless of the nature of the activity or the type of employment contract entered into for that purpose”. (par 48) This interpretation was drawn from the context, purpose and origin of the provision of art. 7(3)(c).

With regard to context, the court noted that the provision sits within article 7, providing overall for the right of residence, and its retention, for all those who have exercise an activity in an employed or self-employed capacity. As affirmed in Prefeta, retention of that right is granted on the assumption that the citizen is available and able to re-enter the labor market within a reasonable period. (par 39-40) The court added that, within the broader context of the gradation of the right to residence that the Citizenship Directive operates, article 7(3) establishes a gradation also for retention of the status of worker. This gradation is based among others on reasons for inability to work and on the initial duration of the period of activity. On the top grade are those citizens who are unable to work because of accident or illness, because of undertaking vocational training, and because of having remained involuntarily unemployed after having worked for at least one year. All of these retain the status without time limits. On a lower grade are those who have worked for less than one year and who can retain the status for as long as the Member States like, provided this is not less than six months. (par 43-45)

In terms of purpose, the court observed that the offered interpretation of art. 7(3)(c) satisfied the general objective of the EU Citizenship Directive, namely strengthening the right of movement and residence, without undermining its further objective of protecting the Member States’ finances from undue burdens. The interpretation was also consistent with the specific objective of article 7(3) of the Directive, described in previous case law (e.g. Gusa) as that of protecting the right of residence of persons “who are in the absence of work due to circumstances beyond their control”. (par 49-50)

Finally as to the origins of art. 7(3)(c) the court found that its reading of the provision mirrored the intention of the drafters. The travaux preparatoires indicated indeed that the second part of art. 7(3)(c) had been added in the draft directive so as to extend protection to workers in involuntary unemployment after less than a year regardless of the type of contract covering their activity. (par 53)

The ruling concluded with a dictum inspired by the AG opinion and with a note to the referring court.  The dictum is that persons residing on the basis of the Citizenship Directive, including those retaining the right to reside under art 7(3), are entitled to equal treatment with nationals. Hence if national workers who have worked only for a short period of time are excluded from social benefits, the exclusion applies also to migrant EU citizen workers. The note to the referring court was that it was accordingly for it to determine, in light of national law, whether Mr Tarola was entitled, under the principle of equal treatment, to the social benefits he was seeking.

Comment

At least three aspects in this judgment are worthy of note. A first one is the way the court treats the citizenship directive. A second one is the court’s note on entitlement to social assistance. A further one is the balancing exercise the ruling performs between protection of movement and residence rights and protection of state finances. These elements, respectively, help situate the judgment at three crossroads: the one between the law on free movement of workers, and the law on free movement of citizens; the one between EU law on equal treatment, and national law on welfare assistance; and the one between competing objectives pursued by EU free movement law.

With regard to the Citizenship Directive, the court sticks to the rule of interpretation it promises up front. The directive cannot be interpreted restrictively. And indeed the court offers a quite broad interpretation of its relevant provision. That the provisions of the Citizenship Directive require broad interpretation is no novelty. The court has repeated this rule of interpretation again and again in several cases. Yet in recent years it has not always as enthusiastically applied the same rule (a recent example is the SM case, treated here; a slightly older one is Singh and others).  The court’s approach in Tarola is the result of a special conjuncture: the court is de facto ruling on the rights of a non-economically active citizen, but it is formally dealing with a worker-it is not in question indeed that Mr. Tarola meets the EU law definition of worker (par. 25)-. This allows the court to intersect, if not the law, the interpretive approaches belonging to two different strands of its case law: the assertiveness of its case law on workers, and the caution of its recent case law on non-economically active citizens.  Echoes of the former allow the court to deliver, from a relative comfort zone, a result that bears on the social protection of Union citizens.

The caution that characterizes the case law on non-economically active returns, on the other hand, through the court’s drawing of a clear boundary between right to equal treatment and entitlement to social assistance. In the final dictum, the court emphasizes that the right attached to a worker’s, or citizen’s, right to residence, is one of equal treatment. Retention of the status of worker, and of the corresponding right to reside, does not necessarily mean entitlement to obtain social assistance. It simply means entitlement to apply for it, and obtain the same response as a national would get. This sounds as a reminder, and a word of reassurance, to the Member States that they are free to organize their welfare systems as they wish. At the same time the court gives the Member States a gentle nudge: if they do not like paying benefits to those who have worked too little, they had better say so in national law.

The gentle nudge to the Member States ultimately reflects the court’s endeavor to take into account, and balance in Tarola, two competing objectives of the Citizenship Directive. One is the objective of strengthening the right to move and reside for all Union citizens (witness to the case standing at the crossroads of workers and citizenship law, the court refers in reporting those objectives to citizens in one sentence, to workers in the next, par 49-50). The other is the objective to ensure that the Member States’ social security and social assistance systems are not placed under an undue burden. The tension between these two objectives underpins the entire case law on social benefits provision in the context of free movement. This brings the Tarola ruling closer to the line of cases that from Trojani descends to Dano and its progeny. The tension in that case law, however, is not always as clearly acknowledged and as carefully addressed as here. In this respect, Tarola might signal a further turn in a doctrine that has experienced several twists. It may be the first sign of the taking on, on the part of the court, of a more coherent role in reconciling the conflicting objectives of the law on free movement.

Barnard & Peers: chapter 13

Photo credit: BIMIreland.ie

CJEU case law on EU citizenship: normatively consistent? Unlikely! - A response to Davies’ ‘Has the Court changed, or have the cases?’

Alexander Hoogenboom, PhD, MSc. LL.M. Senior Policy Officer at the Dutch Healthcare Authority and associate researcher at the Institute for Transnational and Euregional cross border cooperation and Mobility, Faculty of law, Maastricht University. The position taken in this paper solely reflects the views of the author.

Introduction

Recent case law of the Court of Justice on EU citizens’ access to benefits has been seen by some as a restrictive turn compared to prior case law, in response to a rise in populism. However, the article by Davies in a recent special issue of the Journal of European Public Policy is to be commended for its original take on this alleged ‘turn to restrictiveness’. The goal of his article is, as I see it, questioning whether the Court has indeed recently become stricter (in the sense of more State-friendly, less Union citizen-friendly) in response to the populist turn in the European political landscape. In that vein, Davies submits, contrary to what he sees is the main thrust in the scholarship, that the court has been ‘normatively consistent’ (see also this research paper he authored) and that the perceived difference in recent litigation outcomes from the golden years of Union citizenship are due to the litigants being less ‘deserving’ of access to benefits provided by the host Member State: ‘what goes in will provide an overwhelmingly plausible explanation of the outcomes on its own’.

This argument is supported by relying on a methodology for measuring the ‘deservedness’ of the litigants based on a set of indicators: the ‘good behaviour’ of the applicant, the possibility for exceptional harm should the benefit be denied, the possible cost to society resulting from the grant of a benefit (e.g. because it is long-term or applies to a large category of persons), whether granting the benefit would mandate a particular positive outcome and whether the State was somehow at fault for the specific conundrum that the litigant finds him or herself in.  The more ‘deserving’ (high contribution to society, low cost), the greater the likelihood of a litigant-positive result.

Applying these criteria to a selection of case law, Davies proceeds to show that indeed, the Dano’s (never worked, never integrated, lacked resources for self-support) of the world seem to be less deserving of benefits than the Sala’s (long-term legal resident, child benefit denied due to a technicality by an inconsistent state). (On the Dano case – the first judgment showing the perceived turn toward a stricter approach – see the discussion here).

There are, however, a few issues one could take with this approach. In part, it is questionable whether the facts as available to scholars of EU law decisions allow one to accurately apply the proposed test – especially given that the publication of the Reports for the Hearing was abolished since 2012 (see also para 119 of the AG opinion in Breyer). This is exacerbated, as Davies admits, by the fact that a negative outcome throws its shadow forwards: one then tends to present the facts in such a way as to support the later conclusion.

In part, it is questionable whether deservedness is objectively verifiable: after all, one could also argue that the rise of populism or say an economic crisis – the ‘times we live in’ – simply provide a different kind of lens through which to view the migratory Union citizen. The same fresh-faced youth enrolling in higher education in a Member State different from the one of his nationality can be cast as a self-improving, future productive member of that society (compare to Gravier, para 24) or as a welfare-abusing, locust-like creature eating his or her fill and subsequently returning from whence he or she came (see the main arguments by Belgium and Austria in the the judgment in Bressol).

However, the main challenge I would like to level is that the methodology suggested is applied to an incomplete ‘data set’ (the cases), in part due to selection bias (the focus in the article on the cases ‘most discussed’).

Grzelczyk by another name: The curious case of Förster

The case of Grzelczyk is among those used by Davies to support his thesis: his particular circumstances ‘paint a sympathetic picture’. A hard-working young Frenchman, resident in Belgium for some time and whose claim to financial support finish his last few months of study would seem altogether reasonable. Indeed, the Court, while leaving it to the national court to make the final decision, seemed to suggest he should be so entitled.

Nonetheless, the Court was not so generous in Förster. Jacqueline Förster was a German national who grew up in a town not far from the Dutch border. She moved to and resided in the Netherlands from March 2000 onwards – partly to be with her Dutch boyfriend. There, she enrolled into a teacher training programme and later in a course on educational theory at the Hogeschool van Amsterdam. In the period 2000-2002 she undertook various part-time jobs, until she engaged in full-time paid practical training at a Dutch school providing secondary education for children with special needs (October 2002 – June 2003). After her practical training she did not engage in gainful employment until July 2004. She graduated from her course that summer.

At stake was the intermezzo period: the Dutch Student Benefit Authority (then called IB-Groep) assessed in 2005 that she had not been eligible for study maintenance assistance in the second half of 2003 and ordered her to repay the amounts received.

It would seem to me that Ms. Förster ticked practically the same as mr. Grzelczyk. Measuring her ‘deservedness’ according to the matrix suggested by Davies we find:

-       Good behaviour: self-support initially (three years), enrolled in studies and contributing to Dutch society even during her studies in her practical training period. Advocate-General Mazàk moreover made the explicit point that she did not seem to have moved with the goal of claiming benefits.

-       Exceptional harm: Although the withdrawal of the benefit was retroactive, when assessing her right to access the benefit as matters stood in 2003 one could plausibly maintain that, as with Grzelczyk, non-access to the benefit would have made the completion of the degree much more difficult.

-       The support requested covered only a limited time: at issue was a six-month period only.

-       Limited cost of the support: As with Grzelczyk, this aspect is hard to estimate.

-       Positive outcomes: the completion of the degree would enable her to contribute to Dutch society and economy as a teacher.

-       State at fault: One could make the argument that given the fact that they had initially granted her the benefit and only much later (some one and a half years) took the final decision to recover the amount, should count against the Dutch state.

Finally, in addition to these elements from Davies’ deservedness matrix, the applicant had a relationship with a Dutch national and given her work, presumably, spoke fluent Dutch – both elements that the Court in other cases has found relevant when assessing eligibility to benefits (see Prinz and Seeberger, for instance).

All in all, one would assume, from the methodology applied that this applicant should be successful, or that should have led to a ‘discretionary-result-with-a-hint-in-favour-of-the applicant’. Yet, she categorically lost her case, notwithstanding the suggestion by the Advocate-General to consider the circumstances of the case along the lines suggested above. Yes, the conclusion was (partly) mandated by the EU citizens’ Directive 2004/38, but the Court certainly did not ‘bend over backwards to find exceptions to [this] restriction’ as his matrix would predict.

The big turnaround: Commission v Austria and Commission v the Netherlands

The cases of Commission v Austria and Commission v the Netherlands are perhaps even more glaring. The issue concerned a travel benefit aimed at students attending higher education. In the Austrian case, decided in 2012, Austria argued that it could refuse access to the benefit where the Union citizen in question had not yet obtained a right to permanent residence (a five-year prior residence requirement in practice). In contrast, the Court found that all persons enrolled in higher education should have automatic access.

The case is somewhat hard to fit into the matrix, but intuitively one could argue that the Court was not swayed by the hypothetical good behaviour of potential beneficiaries (no prior residence requirements, no integration), nor was the benefit for a limited time (it could last the entire study period), all persons enrolled in higher education persons were eligible (no ‘limited costs’) and it is hard to imagine an ‘exceptional harm’ had the benefit been denied to the hypothetical applicant. Notwithstanding this apparent lack of deservedness, however, a positive outcome for the hypothetical beneficiaries.

In 2016, in Commission v the Netherlands, the Court reached the opposite conclusion. The benefit at issue was in all respects the same as at stake in Commission v Austria (Table taken from A. Hoogenboom, Balancing Student Mobility Rights and National Higher Education Autonomy in the European Union (BRILL, 2017)):

	Austria	The Netherlands
Nature of the benefit	Fee reduction for the use of public transport (grant)	Free use of public transport on some days of the week; reduced fees on the other days (conditional grant)
Apparent purpose	To facilitate access to education	To facilitate access to education
Provision	Commercial public transport operators	Commercial public transport operators
Financing	The individual governments of several Länder	Central Dutch government
Recipient	Student	Student
Eligibility	Enrolment higher education Parents in receipt of Austrian family allowances	Enrolment in higher education. Student in receipt of Dutch studiefinanciering

Here the Court decided that the Netherlands could restrict the benefit along the terms suggested by Austria in the earlier case. It stretched the limits of consistency by trying to distinguish the latter case with a bizarre reference to the difference in national classification of the benefit, despite it being settled case law that such classifications are irrelevant - a point the Court itself made in Commission v Austria.

So here we initially have a judgment against the State and in favour of the Union citizen, whereas the matrix would likely predict a judgment in favour of the State. Four years later the Court came, on largely the same facts, to the opposite conclusion. This should not be seen as a (late) vindication of the matrix however, since the Court formally distinguished the latter case from the former, meaning that both cases continue to be good law.

Conclusion

Whereas the line of inquiry presented in Davies’ paper is an interesting one, it cannot account adequately account for the existence of Förster and the Commission v Austria/Netherlands saga. Apparently deserving applicants get rejected, and the same benefit with a similar hypothetical user base gets a different legal treatment in the space of a few years. Two possible explanations suggest themselves:

-       The Court is not consistent. This would mean that Davies’ hypothesis is disproven.

-       The matrix presented, by which the court supposedly measures deservedness, is flawed. This goes to the methodology used and means that we simply haven’t found calculus that the Court uses.

It would seem to me that the existence of both Commission v Austria and Commission v the Netherlands as ‘good law’ seems to hint at the former. In any case, however, to argue that the Court of Justice is normatively consistent, on the basis of the analysis carried out by Davies, is a bridge too far.

Barnard & Peers: chapter 13

Photo credit: i newspaper

Don’t think of the children! CJEU approves automatic exclusions from family benefits in Case C-308/14 Commission v UK

Charlotte O'Brien, Senior Lecturer, York Law School 

The Court of Justice’s retreat from the zone of Member States’ welfare systems hastens. Having once suggested that citizenship is ‘destined to be our fundamental status’, and provides the basis for a ‘degree of financial solidarity’, the Court had established that EU nationals falling into temporary difficulties would be entitled to some amount of support from a host state, depending on how ‘deserving’ the claim seemed to be.

But the Court has shifted away from notions of citizenship, so there may never be such a thing as a reasonable burden. Having established that EU migrants claiming social benefits can in principle be subject to a right to reside test not applied to own nationals in Brey, the Court found in Dano that a case-by-case assessment where someone was deemed to have moved for the ‘sole’ purpose of claiming benefits was not necessary. This was expanded in Alimanovic and Garcia Nieto to suggest that jobseekers were not entitled to a case-by-case assessment either.  In Commission v UK we see the CJEU’s desires to accommodate the UK’s discriminatory tendencies rather usurp the applicable legal framework.

The key tensions at the heart of the case – the discriminatory effects of the right to reside test, and its application to family benefits – are glossed over in a brief judgment. The Brey and Dano principles are imported into Regulation 883/2004 (which concerns the coordination of social security in cross-border cases) and applied to family benefits, while the burden of proof is reversed so that a discriminating Member State is presumed to be acting lawfully if they brandish the ‘public finances’ trump card.  

The decision finds that the UK is entitled to apply the ‘right to reside’ test to claimants for Child Benefit and Child Tax Credit; UK nationals automatically fulfil the test, while EU national claimants must show that they fulfil the conditions of Article 7 of Directive 2004/38 (which sets out the main rules on EU citizens moving to another Member State). In short, they must be workers, or have retained worker status, or be the family members of EU national workers. This analysis addresses four issues that stand out in the judgment: (i) the extension of the ‘right to reside’ principle, in paragraph 44 of Brey, to override Article 4 in regulation 883/2004, and the implications for other benefits; (ii) the issue of direct versus indirect discrimination and the reversal of the burden of proof on the issue of justification; (iii) the failure to differentiate between different ‘types’ of economic inactivity, jettisoning proportionality, extinguishing EU citizenship, and ignoring the rights of the children; and (iv) the finding that the UK does not ‘systematically’ check EU nationals’ right to reside.    

(i) Distilling a fundamental principle from para 44 of Brey

 

Article 4 of Regulation 883/2004 states:

“Unless otherwise provided for by this Regulation, persons to whom this Regulation applies shall enjoy the same benefits and be subject to the same obligations under the legislation of any Member State as the nationals thereof.”

In Brey, the Court sidestepped this equal treatment requirement, by finding that the benefit at issue was social assistance. This was material to the lawfulness of the right to reside test – the questions were inextricably interlinked, and the nature of the benefit ‘must be examined in the context’ of the right to reside question. The right to reside test was a lawful means to avoid undue burdens on the ‘social assistance system’.

The classification of the benefit was important in Brey. But in Commission v UK classification is treated as irrelevant – and one sentence in Brey (there is ‘nothing to prevent, in principle, the granting of social benefits to Union citizens who are not economically active being made conditional upon those citizens meeting the necessary requirements for obtaining a legal right of residence in the host Member State’) is made to do a lot of legwork – finding that all benefits can be subject to a discriminatory right to reside test. Article 4 Regulation 883/2004 does not get a look in other than to state that it has not been infringed.   

 

The Court found that the Regulation deals with competence, not eligibility for benefits. But this is too simplistic. The Regulation does govern aspects of eligibility – stating that place of residence cannot be a deciding factor in many cases; stating that conditions as to insurance must be capable of being discharged by insurance in other Member States, and so on; and it provides in Article 4 a principle of equal treatment for persons subject to the Regulation. 

Family benefits are ‘pure’ social security. There is no basis for finding that they fall within the ‘social assistance’ exclusions of Directive 2004/38, or for finding that the primary law requirement of equal treatment in Article 18 TFEU should not apply. There is no specific provision in the Treaty or secondary law excluding Union citizens from equal treatment with regard to family benefits. They are squarely in the material scope of Regulation 883/2004, and so subject to the equal treatment provision therein. In this way the Regulation offers some protection to the children in migrating families, since they are typically subjects rather than agents of migration, and it has usually been accepted that they should not be penalised for changes in their parents’ work status.

Several provisions might therefore plausibly prevent the application of a right to reside test to Union citizens claiming a family benefit. But the Court’s reasoning is short and simple – it quotes the Brey statement. One sentence in a judgment that dealt with a different category of benefits, where the material part of that decision is not being followed, is arguably of insufficient legal weight to displace a presumption of equal treatment, in the absence of a Treaty provision or express secondary law provision to do the displacing.

The end, contradictory, result, is that the limitations of Directive 2004/38 are independent of the provisions of Regulation 883/2004, so the Directive can adopt a wider definition of social assistance, but the equal treatment provision in Regulation 883/2004 is bound by limitations written into Directive 2004/38 – limitations intended for different benefits. This judgment imports the personal scope of Directive 2004/38 into Regulation 883/2004. But that Regulation has a deliberately wider personal scope. The ECJ made clear that the Regulation’s predecessor, Regulation 1408/71, was not confined to people in employment in Dodl and Oberhollenzer. Regulation 883/2004, far from narrowing the scope of Regulation 1408/71, was enacted to “replace and extend” that instrument. Recital 42 refers explicitly to ‘the new category of non-active persons, to whom this Regulation has been extended’. Here, the Court’s finding that such persons will not be left without a competent state, just without benefit eligibility, is a little simplistic. Extrapolating that logic, domestic rules may well exclude such people (falling into Article 11 (3)(e)) from the whole material scope of the Regulation – in which case, for what is that State competent, and why have a category 11(3)(e) at all, other than to point to whose rules of exclusion apply?  

The implications of the judgment could have ramifications throughout the EU, for States that have not yet adopted such tests, and for States that have so far limited them to benefits with an element of social assistance, who might conceivably roll them out further. It could steepen the welfare cliff edge for those who have been working but who fall out of work (or have been a family member of a worker and cease to be so). It could result in excluding a number of workers who cannot adduce sufficient evidence that their activities meet nationally-imposed definitions of work – e.g. meeting hours or earnings thresholds continually over a prolonged period of time. And it could result in deepening child poverty for vulnerable children, whose welfare might otherwise have received some protection from the coordination scheme. It endorses ‘hand-to-mouth’ citizenship.

(ii) Direct versus indirect discrimination and reversing the burden of proof

The Commission claimed that the rule created direct discrimination but the Court did not engage with that claim. It simply reiterated the Brey point, that there is nothing to prevent right to reside tests, then added that where such tests are adopted a Member State ‘commits indirect discrimination’.

But the condition is directly discriminatory. Only EU nationals must provide evidence of a right to reside. Only EU nationals can be excluded from entitlement due to economic inactivity. The application of an extra condition to non-nationals was recognised as being directly discriminatory in Grzelczyk.

The Court slightly confuses things by pointing out that a ‘residence condition’ is indirectly discriminatory. But the right to reside test is not a residence condition. It is a requirement to be economically active and is only applied to EU nationals.

On finding instead that indirect discrimination was at issue, the Court turned to the question of justification.

Typically, where a potential infringement has been made out, it is up to the infringer to demonstrate that their actions are justified (see O’Flynn and Groener). The Member State must show that they are pursuing a legitimate aim, that the means are proportionate and appropriate, and do not go beyond what is necessary.   

The justification requirement was rather swiftly dealt with, as the Court shied away from the judicial kryptonite that is the mention of public finances. In spite of mounting evidence that fears of benefit tourism are misplaced, no evidence of a threat to public finances was required for this aim to be accepted as legitimate. The Court did not ask whether the test itself was proportionate or appropriate. Instead it asked whether the checks conducted as part of the test were proportionate and appropriate.

And here it shifts the burden of proof to the Commission. The Court summarised the information provided by the UK noting that claimants must provide a ‘set of data’, and further checks are carried out ‘only in specific cases’ and ‘only in the event of doubt’.

But the judgment does not tell us how much data is required of claimants, how many ‘specific’ cases lead to further checks, or how many cases involve ‘doubt’; the repeated use of the word ‘only’ without these statistics tells us nothing about scale or proportionality. 

Instead it is up to the Commission to show that  ‘such checking does not satisfy the conditions of proportionality, that it is not appropriate for securing the attainment of the objective of protecting public finances or that it goes beyond what is necessary to attain that objective.’

(iv) Dismissing the rest of Brey: jettisoning proportionality, extinguishing EU citizenship, and ignoring the children

Given the reliance placed upon para 44 in Brey, para 45 is conspicuous by its absence; it added ‘However, it is important that the requirements for obtaining that right of residence… are themselves consistent with EU law’.

And in Brey the Court found that EU law precluded the automatic barring of economically inactive persons from entitlement to benefits without assessment of their individual circumstances. Relevant circumstances included the duration of residence, amount of income, amount and duration of benefit claimed, etc.

This is the proportionality route to entitlement – where Union citizenship in theory offers a safety net for those who fall between the categories in Directive 2004/38. It allows for some differentiation based on circumstances, recognising that the label of ‘economic inactivity’ can mask a wide range of residence, economic and integration histories, and benefit claims may represent a wide range of claims of varying degrees of reasonableness.

In recent cases we have seen the Court retreat from this approach, finding that a case-by-case assessment was not necessary where the claimant at issue might be a benefit tourist, or where she was a jobseeker. Here, this aspect of Brey goes unmentioned, other than when summarising the Commission’s argument that the test is ‘an automatic mechanism that systematically and ineluctably bars claimants’ from benefits.

The Court did not engage with this argument. It appeared to consider automatic exclusion inherently lawful: ‘As the United Kingdom submitted at the hearing, legality of the claimant’s residence in its territory is a substantive condition which economically inactive persons must meet in order to be eligible for the social benefits at issue’.

The absence of an alternative ground for eligibility for those deemed economically inactive is striking in EU law terms, (even if it is rather old news in the UK), since it marks a departure from the ‘real link’ case law, whereby nearly-blanket rules had to have some proportionality-based exceptions. And it sends any Union citizenship-based right to equal treatment (Article 18 TFEU) up in smoke. It permits treating all ‘economically inactive’ migrants as equally worthless, regardless of their degree of integration into society, regardless of their, or their family’s employment history, and regardless of the circumstances that have led to a loss of worker status. And it permits the total erasure of children’s rights from the factors to be considered, even though it is their rights and their welfare being contested – Child Benefit and Child Tax Credit are specifically designed to address costs of protecting child welfare. In a report analysing recent welfare changes, the UN Committee on the Rights of the Child has already expressed ‘serious concerns’ about the UK’s imposition of cuts to tax credits ‘regardless of the needs of the households’ concerned. The right to reside test goes further, being not merely a cut but a disentitlement for affected children, even if they were born in the UK and have no significant links with their State of nationality.   

The Brey formulation treated as so pivotal, permitting right to reside tests, had itself rested on a series of EU citizenship cases, which established and developed the ‘real link’ concept. Para 44 cited Martinez Sala, Grzelczyk, Trojani, Bidar and Förster, all of which precluded the use of blanket rules, and all of which required some assessment of circumstances of the case.

So the reliance upon the Brey formulation becomes even less persuasive, in light of the departure from all of the authorities upon which that formulation rests. Cases establishing the rights attendant upon EU citizenship cannot credibly be used to make those rights and that status disappear.   

(v) The systematic verification obfuscation

Article 14(2) of Directive 2004/38 allows Member States to verify whether the residence conditions set out in that directive are met ‘in specific cases where there is a reasonable doubt’, adding that such verification ‘shall not be carried out systematically’.

As noted above, the Court found that the checking done by the UK did not amount to systematic verification. But this finding would have been helped by some analysis of Article 14(2) and the distinction between permitted checks and prohibited verification.

The government’s own announcements suggest there is something systematic going on. The government announced in 2014 that restrictions to benefits for EU nationals would be ‘augmented by additional HMRC compliance checks to improve detection of when EEA migrants cease to be entitled to these benefits. The checks will apply to all EEA migrant claims’. The Budget made clear that these checks would be applied to ‘new and existing awards’. In responding to a Freedom of Information request, the government confirmed that it had been carrying out ‘increased compliance checks’, issuing letters ‘targeted at EU/EEA Nationals’ requesting further information and/or evidence to check that claimants met entitlement conditions for Child benefit and Child Tax Credit.

Moreover, claimants face routine requirements for ‘documentary evidence’ of entitlement, and a ‘wide range of checks and an annual review’ in all cases of cross-border claims. It is difficult to know what would infringe Article 14(2).

To summarise, this judgment seems driven by the teleology noted in the Advocate General’s Opinion – to avoid offending the UK government at all costs. The difficulty is that the legal framework does not very easily bend to the desired outcome. The Court has seized upon one sentence in a previous judgment, and clung to it as providing all the necessary authority to override any conflicting legal principle. The Court avoids dwelling too much on the relative weight of legal principles, by simply skipping the analysis. Article 4 of Regulation 883/2004; Article 18 TFEU; the prohibition of direct, as opposed to indirect discrimination; the appropriateness of the right to reside test; the effects of Brey with regard to proportionality; EU citizenship; Article 14(2) of Directive 2004/38… they get little, if any, attention. Primary law and secondary law are presumptively displaced in the face of a fragment of a judgment that the Court is choosing not to follow – a fragment taken out of context, and pitted against the authorities upon which it is based.

The Court has missed an opportunity to engage in a principled and honest review of the directly discriminatory nature of tests that impose conditions of economic activity on EU nationals but not on own nationals. That in itself is not surprising, since the legal fiction that such tests are indirectly discriminatory seems to be the pragmatic acceptance of a politically necessity. But in allowing such tests to seep beyond protection of the ‘social assistance system’ and to govern eligibility for all benefits related to ‘public finances’, in dismissing the equal treatment provisions in primary and secondary law, in importing conditions to curb the personal scope of Regulation 883/2004, in reversing the burden of proof for justification, and deferring to the public finances trump card, the Court has divined from recent case law a higher, fundamental principle of exclusion, and a default of discrimination. The children of economically inactive EU nationals are now, in EU terms, officially irrelevant, since right to reside tests that exclude them wholesale from entitlement get the green light, with no requirements for citizenship, real links or proportionality to play a part. This may seem an inevitable result of the prevailing political wind, but a little more discipline would have been welcome, to address the legal bases that were engaged, and to keep the judgment more carefully confined. Instead what we have is light on authority, but sweeping in its potential reach and detrimental effects upon Union citizenship and on EU national children.     

Barnard & Peers: chapter 13

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